Month: June 2017

It seems to me that marketers love focus groups. In almost every discussion I’ve had on solving a market research problem, marketers have suggested the possibility of focus groups. Maybe they’re attractive because they are relatively inexpensive compared to other research methods, can be organised quickly and are deceptively easy to conduct. And you can’t discount the obvious benefit of being able to interact directly with your desired audience.

But a word of caution: focus groups are not the ideal solution in every instance where you need to learn more about your market. Inherent in the use of focus groups are some risks that, if not accounted for, can lead to incorrect conclusions and costly decisions.

This brief post summarises what we’ve found to be the main drawbacks of focus groups.

Group think

People’s ideas and opinions tend to converge when discussed in a group. You’ve probably observed this yourself in meetings. Prior to a meeting, you may have a fairly strong opinion on the issue to be discussed. During the meeting, a strong personality dominates the conversation and either you do not get an opportunity to add your two cents, you start to change your mind and lean more towards the other person’s opinion or you find it easier to only add your opinions that are in alignment with the majority rather than start an argument by disagreeing. In any case, the moderator leaves the session believing that the strong personality’s position was a consensus across the group. In a perfect world, however, the moderator would have had the benefit of your point of view because odds are there are other people in the market that think like you do.

People lie to themselves, so they will lie to you too

This one is hard for most people to fully appreciate in business settings, but often we do not do what we say we will do. That’s why I do not suggest that people use focus groups to gauge intent to purchase. Let’s face it, we all have good intentions that aren’t realised; we don’t think of them as lies. But in this type of research setting, especially if you’re trying to gauge likely purchase, asking people what they plan to do is often not helpful. Yes, there are ways to minimise this, but when compounded by group think, it’s a tall order.

You only get answers to the questions you ask

To be fair, this is a risk in almost all types of research. But in focus groups there is a real danger because you often get such interesting and potentially useful feedback that you may not realise that you didn’t get a good answer to the most important question. Conversations may get derailed, defused or entirely omitted as you run out of time. Consider the example of a focus group to discuss a new product the company plans to offer. Odds are, the discussion would zoom into product features, price points, potential applications, and so forth. But the most important questions really should be: would anyone actually buy this product and, if so, why? That alone could take up the entire hour/hour and a half of a focus group. This leads to a secondary point, which is that too often focus groups attempt to cover too many topics in one session, which does not give the moderator time to really dig deeply into any one issue.

The results are not statistically representative

Too often people confuse the fact that focus groups provide insight into the needs, thoughts and feelings of a target market with the need for insights that are representative of that market. Let’s clear that up. For any sample – the focus groups participants in our case – to be representative of the underlying population, it has to be matched on all attributes that are expected to be influential on research outcomes. This requires detailed understanding of the underlying population that goes beyond basic demographics. You may also need to know their likes/dislikes, geographical location, level of education, family responsibilities, etc. Then you have to ensure that the proportions of various segments of that underlying population are reflected in the same proportions within your sample. But focus groups tend to have no more than twelve people, which may mean one person per segment. One person’s opinion cannot represent their entire segment. There are some workarounds, like multiple focus groups with different segments, very precise selection criteria, etc. But a word of caution: even if you consider the smallest representative sample size, which is around 300 persons, odds are you’re not talking to anywhere near that many people in your focus groups. Don’t confuse informative with representative. They each have their place.

The bias of compensation and other intangible benefits

There are individuals who simply enjoy participating in research activities and care nothing about the topic you’re investigating. They’re opinionated and revel in opportunities where they can share their points of view. Some people in larger countries even make a living from participating in paid research activities. I remember one participant in one of our focus groups casually debating with me about how much he should be paid, even though he was amongst those that contributed the least and we had to keep pushing him for feedback. Clearly, he wasn’t there because of any deep interest in the topic. It’s like gauging the mood of the population simply from listening to a call-in programme. Not everyone who has a strong opinion will call in, and the loudest people do not always speak for the majority. On the flip side, if you don’t compensate people for taking the time out of their busy schedule to attend your focus group, will anyone come?

In short, focus groups remain one of our favourite research tools, but they’re not ideal for every situation. Interested in learning more about how to organise your own focus groups, email us at *protected email*

Aim of the Project

In Barbados, consumers can pay for goods and services using cash, debit cards, credit cards, cheques, or direct debits (automated payments) from their bank account or online services that link to their credit/debit cards. Our client wanted to understand why the use of certain payment methods was declining while others were increasing, as some of the popular payment methods were more time consuming and posed security challenges, and it, therefore, was not intuitive why they were so popular.

What we did

The payment market has four major players:

Consumers – they determine which payment methods they prefer to use to conduct their business

Merchants – they determine which payment methods they are going to accept within their companies

Financial institutions – provide the various methods of payments to both consumers and merchants, and therefore partially influence what is available in the market

Payment processing companies – provide and operate the platforms on which the payments are transacted; in Barbados these include both private companies and Government-operated clearinghouses.

Each of these players could be making strategic decisions that influence the use (or non-use) of the available payment methods. Background analysis ruled out the payment processing companies as potential influencers, as they had not changed any of their fees, rules or processes in the time period under investigation. To determine how the other three players could be contributing to the observed trends, we conducted a survey with consumers, a survey with merchants, and stakeholder interviews with financial institutions. The findings of all three exercises were analysed and collated into a summary report that highlighted the main factors that explained the changing use of payment methods. The results were then presented to both our client and some of their key external stakeholders.

Impact of Project

In light of the findings, our client revised their corporate strategy to better encourage the use of the payment methods they preferred, and developed a supporting marketing campaign. Their approach therefore spanned both marketing and product design, and early indicators suggest that their efforts have started to result in the market changes that they desire.